After being left for dead, Nintendo is the hottest name in gaming again

By James Titcomb

Updated6 November 2017 — 12:04pmfirst published at 4:40am

Two years ago it was not unusual to ask what future Nintendo had, if any. The Japanese video gaming group was in trouble — revenues had fallen for six consecutive years to less than a third of their peak and its latest console, the Wii U, had been a failure.

Today, that picture is almost unrecognisable. Nintendo, left for dead, is once again the most exciting name in the industry. Last week, shares hit their highest levels since 2008 as it upgraded forecasts for the Switch, the company's latest console. Its market value even briefly surpassed that of its old enemy, Sony. The company's astonishing turnaround has been an underdog story worthy of Mario himself.

Compared to Hollywood or the music industry, video gaming is still relatively young, but Nintendo's roots go much further back than the electronic games revolution of the Seventies. It was founded in Kyoto in 1889 as a playing card company and only dabbled in video games from around 1975. It was not until 1981 that its big break came with Donkey Kong, introducing the world to a barrel-hurling monkey and a moustached hero. The game, created by Shigeru Miyamoto, catapulted Nintendo on to the world stage. Nintendo named its hero Mario and released a string of home and portable consoles, including the Game Boy, along with an astonishing series of Miyamoto-inspired hits. But in 1994, Sony's PlayStation crashed the market, and in 2001, Microsoft released its own console, the Xbox.

Nintendo is back with a vengeance.

Photo: Kiyoshi Ota

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Over time, both cashed in on the growing demand for high-powered, violent and, later, online games as they shifted from young players and enthusiasts into a mainstream pastime for wealthier adults.

Despite Nintendo producing what are seen as some of the greatest games of all time during this period, its consoles, the Nintendo 64, GameCube and Game Boy Advance, did not sell as well as their predecessors. Redemption came with the DS, a dual-screen hand-held console that became one of the pioneers of the touchscreen in consumer electronics, and the Wii, the home console that featured an innovative wand-like controller.

While the biggest PlayStation and Xbox titles were Grand Theft Auto and Call of Duty, Nintendo found success in Brain Training, Nintendogs and Wii Fit. But by the time the Wii's successor, the Wii U, rolled around in 2012, the smartphone and tablet revolution was in full swing. Casual gamers who had flocked to the Wii were now playing Candy Crush Saga and Angry Birds. Nintendo was left floundering.

In May 2012, Nintendo reported its first loss in three decades, and would go on to repeat the act two years later. Critics feared the company would go the way of Sega.

The creative genius behind much of Nintendo's success is Shigeru Miyamoto, who came up with Donkey Kong and Super Mario.

Photo: Supplied

Nintendo initially refused to cede control of its intellectual property but eventually signed a deal to bring its titles to mobile phones.

The seeds of Nintendo's revival were not sowed by the company. In July 2016, a smartphone app by a little-known Californian company called Niantic made a muted debut in Australia. A week later, Pokemon Go had become the biggest app launch of all time, and was making millions of dollars a day.

Big questions were being asked about the future of Nintendo after the death of president Satoru Iwata, right, in 2015.

Photo: Bloomberg

While Nintendo had no direct part in the game, having spun off the Pokemon franchise years earlier, its success brought two benefits: the company's large stakes in the companies behind it helped the finances, but it also reminded a generation of smartphone gamers about Nintendo. Soon, Nintendo's first in-house mobile game, Super Mario Run, came along. It went on to be downloaded 200m times. In March this year Nintendo released the Switch.

The console blurred the boundaries between TV-connected machines and portables, and was initially dismissed by critics. The outcome shows otherwise. Last week, Nintendo predicted that the Switch would sell more units in its first year than the Wii U had in its five-year lifetime.

Reports of the company's death at the hands of the smartphone had, seemingly, been greatly exaggerated.

Piers Harding-Rolls, lead games analyst at IHS Markit, puts the Switch's initial success down to an exceptionally strong stream of game releases, including new Zelda and Mario titles. The success has returned Nintendo to a sound financial footing, but Nintendo is still not without its challenges.

Buyers of the Switch are "core gamers", distinct from the consumer base that allowed it to sell 100m units of the Wii.

To repeat its early success, it will have to broaden its appeal.

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Nintendo's reputation for pushing boundaries has always granted it as many misses as hits. But at least its current success has granted it a few more lives.